Ahmedabad is the most affordable housing market among the top eight cities, with a ratio of 22 percent, followed by Pune and Chennai at 26 percent each in the first half of calendar year 2022, the property consultant said in a statement.
Knight Frank’s Affordability Index saw a steady improvement from 2010 to 2021 in the top eight cities, especially during the pandemic when the Reserve Bank of India (RBI) cut repo rates to their lowest levels in a decade.
However, with two consecutive repo rate hikes, the RBI’s cumulative 90 basis point rate hikes have reduced home affordability by an average of 2 percent across markets and increased EMI burden by 6.97 percent.
Knight Frank India chairman and managing director Shishir Baijal said housing affordability has deteriorated over the past few months.
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“On average, affordability has declined by 200-300 basis points in major markets. However, despite the increase in prices, the markets remain largely affordable,” he added.
Affordability, combined with a positive shift in sentiment toward home ownership, will help keep housing demand intact, Baijal said.
Even for the date, Mumbai remains the most expensive housing market in the country. In the first half of 2022, the city’s affordability index increased to 56 percent from 53 percent in 2021.
Hyderabad is the second most expensive housing market in the country. In the first half of 2022, the city’s affordability index rose to 31 percent from 29 percent in 2021.
The Delhi-NCR market ranks third in terms of the most expensive housing market. In the first half of 2022, the city’s affordability index rose to 30 percent from 28 percent.
Bengaluru’s affordability index rose to 28 percent from 26 percent, while in Kolkata the index increased to 27 percent from 25 percent.
According to the affordability index, Pune and Chennai are the second most affordable housing markets in the country.
Pune’s affordability index rose to 26 percent from 24 percent, while Chennai’s index rose to 26 percent in the first half of 2022 from 25 percent in 2021.
“Ahmedabad has consistently been the most affordable city in India since 2019,” the consultant said, adding that the city’s affordability index has increased to 22 percent from 20 percent.
“Over the last few years, capital values across India have remained stable or witnessed a slight increase. However, during the same period, the income level has increased significantly, leading to improved affordability,” said Pankaj Pal, Group Executive Director, AIPL.
While there has been a slight increase in the home loan rate over the past few months, it is still below the comfortable levels of 8 percent per annum, he said, adding that “we don’t expect any impact on affordability.”
According to Trehan Group managing director Saransh Trehan, affordability has been slightly affected due to rising mortgage rates. “Nevertheless, house prices, as well as mortgage rates, are still attractive to both end users and investors,” he said.